Microsoft Posts Gain Despite Soft PC Sales

October 20, 2011 nytimes.com
Microsoft Posts Gain Despite Soft PC Sales
By NICK WINGFIELD

SEATTLE — Microsoft said its net income rose 6 percent in its first fiscal quarter, but the company’s results continued to reflect weak growth in PC sales.

The PC market, especially the part representing the companies using Microsoft’s Windows operating system, has suffered lately as economic uncertainty has crimped spending on information technology. Newer types of devices like tablets and mobile phones have sapped some of the business as well.

Microsoft said net income rose to $5.74 billion, or 68 cents a share, from $5.41 billion, or 62 cents a share, a year ago. Revenue rose 7 percent, to $17.37 billion, from $16.2 billion a year ago.

Analysts estimated that, on average, Microsoft would earn 68 cents a share on revenue of $17.24 billion, according to Thomson Reuters. Microsoft’s shares fell 1 percent after it released the financial results at the close of normal trading.

Microsoft said its revenue from selling Windows rose less than 2 percent during its first quarter, which ended Sept. 30. That reflects the fact that shipments of new PCs grew only 3.6 percent globally in the quarter, which ended Sept. 30, according to the research firm IDC. Apple defied the trend, reporting a 26 percent increase in the number of Macs sold during the same period, the company said on Tuesday.

Brendan Barnicle, an analyst at Pacific Crest Securities, said the company’s revenue from Windows sales was weaker than he had expected. “We’ve now had a year where Windows hasn’t come in in-line with analyst expectations,” he said. “It’s less of a miss than in the past.”

The Microsoft division that includes its Office suit of applications fared better than Windows, with a revenue increase of almost 8 percent. That division — Microsoft’s largest, representing a third of total revenue — got a boost from a new version of Office released last year that continues to sell well for the company, despite competition from free and low-cost online applications from Google and others.
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